Just two weeks ago, Greece exited the final phase of its nearly decade-long bailout programme.
The nation’s economy has sent several signals of strength, including 1.4 percent GDP growth in 2017, a multi-billion-euro return to the bond market, and easing of austerity measures. Better yet, the European Commission predicts a further 1.9 percent growth for this year and 2.3 percent in 2019. Leaders are hopeful that these signals translate into new foreign trade relationships and investments that can help in the country’s uphill battle to repay its 322-billion-euro debt over the next four decades.
To that end, the government has crafted a growth strategy that emphasises entrepreneurship, increased productivity, and private investment. It’s especially important for Greece to re-establish credibility among EU member states as the nation returns to global capital markets. This is an area where Aris Xenofos, Executive Chairman of TAIPED, plays a key role.
A Greek acronym that translates into Hellenic Republic Asset Development Fund, TAIPED was created in 2011 to exploit Greek assets and manage the implementation of the country’s privatisation program. It’s a direct subsidiary of the Hellenic Corporation of Assets and Participations. Xenofos said that he – and the rest of the leadership team at TAIPED – work closely with the government to enhance the attractiveness of Greek assets, an effort that “will uplift the profile of the country. That will create confidence. That will create a positive momentum. And that will attract the interest and the capital that we are all looking for”.
In fact, privitisation has been a pillar of Greek bailouts since 2010. The country has received more than 4.7 billion euros from 38 completed transactions between 2011 and 2017. TAIPED’s original, 50-billion-euro target may be out of reach as a result of political resistance and bureaucratic obstacles associated with the crisis, but the organisation’s ambitious 2-billion-euro target for 2018 does appear feasible. “I think we have a very robust plan going forward”, says Xenofos.
Perhaps more importantly than the numbers, the fund is keeping an eye to privitisation’s socio-economic effects for the Greek people. Xenofos stresses that it’s “not only about capital…[or] expertise…[or] technology”. It’s about “striking a balance between growth, investments and community”, he says.
Keeping the fund top-of-mind has also contributed to their success. An open, transparent approach has led to increased communication between the government and investment community. When investors think about Greece, they know to turn to TAIPED. Xenofos chalks a lot of this up to his talented staff. “We place an enormous importance on our people. I’m proud to say that we have a very high calibre and a very experienced team in the fund. They are very well informed. … that can make a difference, especially when you have to deal with such a wide range and complicated stake holders”, he admits.
However, there has been a fair amount of challenges. “The difficult part is to make the decision to consider the assets and put the money on the table”, Xenofos says. TAIPED has focused on developing assets that spur further development in a way that can propel Greece toward nationwide, vertical growth. As such, the fund’s flagships have been largely related to the infrastructure and energy sectors.
Inviting investment groups to administer the Egnatia Motorway, which crosses the north of the country from east to west, is one such example. It provides a safe, secure, and speedy route between land-locked communities and a number of ports, one of which being the Thessaloniki Port. The South Europe Gateway Thessaloniki Limited consortium has recently acquired a 67 percent stake in the port for more than 230 million euros. The funds will contribute to improved infrastructure, operations, and logistics. These concurrent projects will amplify traffic between the motorway and the port, leveraging interoperability and creating exponential value for the country. Describing the Egnatia project as one of TAIPED’s “flagships”, Xenofos believes these “assets have a very meaningful size going forward”.
Another such project is the Thessaloniki Port development, which also incorporates a number of buildings for community activities so that the city feels a positive sentiment toward the venture. Beyond trade benefits, the privitisation of Thessaloniki Port presents a potential for the cruise industry. “We feel we should leverage on the marinas and the assets that we have related to tourism, because we feel Greece is one of the key destinations when it comes to tourism. So, by all means this is a no brainer”, Xenofos noted confidently.
Moving forward, Xenofos explained, “the board of directors actually gave the greenlight for eight out of ten consortiums regarding Alimos [Marina]”. This interest is extremely important and Xenofos highlights that it comes from a wide range of investors: “We have constructors, we have operators, we have local, we have international players”. He and the TAIPED team consider Chios, Mykonos, Rodos, and Kalamaria Marinas to be assets with similar potential. Along the same lines, an agreement for the 20-year extension of the Athens International Airport concession contract is also scheduled to come in by the end of the year.
Xenofos also sees potential for land development and energy assets to attract a large amount of capital. During his tenure, he has pushed forward a very successful tender process where 66 percent of DESFA’s (the Greek natural gas system operator) was acquired by a consortium composed of Italy’s Snam (60 percent), Spain’s Enagás (20 percent) and Belgium’s Fluxys (20 percent). “The actual profit that we managed to receive…was 35 percent higher than the previous uncompleted tender”, he explains. Since the investors are all reputable European companies, the vote of confidence for the Greek energy market indicates that the market will be liberalised further.
Additional privitisations exploiting Hellenic Petroleum and the Public Gas Corporation of Greece (DEPA) are already under way, and investors have set their sights on Greece’s Public Power Corporation (PPC) as well. All of this sends a clear message of confidence in Greek energy markets while expanding Greece’s role in the European energy sector. Greece is also exploring the potential of hydrocarbon and other renewable industry privatisations in order to bolster (and profit from) environmental conservation.
According to Xenofos, Greece has “very specific assets that we need to develop”. As these developments begin, the fund will need to decide to what extent these assets are complimentary or competitive, and whether they can actually be developed in parallel. Those answers will determine the real budget the fund is able to deliver and help guide future privitisation initiatives that TAIPED takes.
Though TAIPED’s term is set to expire in the summer of 2020, the General Assembly of the Hellenic Corporation of Assets and Participations could choose to extend it. Xenefos, for one, feels very confident the fund will have a “very productive and efficient role to play for the growth of the economy”, moving forward.